BEIJING/BANGALORE, May 15 As China's economy
continues to cool, companies are waiting longer and finding it
harder to get paid for goods and services they've already sold,
leading to record amounts of receivables - and potential
write-offs - on corporate balance sheets.

At Longyuan Construction Group Co, an east China
builder of high-rise offices, apartments and highways,
receivables last year inched up 4.9 percent to 4.1 billion yuan
($657.3 million), while on average collection times extended to
95.2 days, compared with 76.3 days for 2011.

Slow collection of money owed is causing Longyuan to delay
its own payments to steel and cement suppliers, Zhang Li, the
company's board secretary, told Reuters, in a ripple effect that
is being repeated across the economy.

"If you don't pay me and I pay others, aren't I just a
sucker?" said Zhang. "I'm not that stupid."

Growth in China's economy dipped to an 18-month low in the
first quarter and may be on track this year for its weakest
showing in more than two decades.

Beijing policymakers are moving to put the world's second
largest economy on a more sustainable footing less driven by
exports and investment, however tightening credit and a
faltering real estate market have raised concerns about a
sharper-than-anticipated slowdown.

A Thomson Reuters survey of data on China's more than 2,300
stock market-listed firms illustrates the impact on corporate
payments, with company receivables - the accounting term for
money owed by customers - on average reaching $160.49 million at
the end of last year, more than double the $65.9 million average
at the end of 2009.

Over the same period, the median collection time for
billings crawled up from 71.4 days to 90.42 days. It was the
first time China's market-listed firms averaged more than 90
days in a decade.

"It's a pretty loud warning bell," said Paul Gillis, an
accounting professor at Peking University's Guanghua School of
Management. "Companies cannot pay-off their receivables in a
slowing business cycle. Some of these receivable may not get
paid, which means you'll see a lot of write-offs in the future."

DISTRESSED REAL ESTATE SECTOR

Reuters News contacted more than 65 firms where receivables
are on the rise and interviewed officials at 12 of the
companies. Not surprisingly, the worst problems were in the most
distressed sectors of the economy, such as real estate.

As a downturn in the property market gathered pace late last
year, more than four years after Beijing began introducing a
series of cooling measures designed to head off an asset bubble,
payments to builders and materials suppliers slowed.

Unpaid bills among construction companies, cement makers and
related firms are now creating interlocking, triangular debt
that stretches across broader parts of the economy.

China West Construction Co, a small
Sichuan-based manufacturer of concrete products distributed
mainly in China's northwest, reported net cash flow from
operations last year turned negative by 41.76 million yuan,
driven by a 23.2 percent jump in accounts receivables, which
reached 3 billion yuan. The firm also wrote-off 226.37 million
yuan in bad debt, a 23.51 percent rise from a year earlier.

In a statement, the company attributed its problems to a
slowing economy along with real estate controls, forcing
construction companies to reduce their payments and use notes in
lieu of cash. Those include acceptance bills, which guarantee
payments only at a future date.

INTER-CONNECTED PROBLEMS

China West's biggest debtor is also the company's largest
shareholder, China State Construction Engineering Corp (CSCEC),
the country's leading building and real estate conglomerate.

CSCEC, together with at least 17 subsidiaries, owed China
West more than 1 billion yuan at the end of December.

Separately, CSCEC reported that its own payables
rose last year by 17.7 percent, to 214.95 billion yuan, with
outstanding payments to construction-related and real estate
development firms comprising more than half of the total.

China West's biggest unpaid supplier was Xinjiang Tianshan
Cement Co., which also is a 3.68 percent company
shareholder.

Xinjiang Tianshan, in turn, owed payments to several
affiliated companies, including 440.1 million yuan to Sinoma
International Engineering Co.

Sinoma's biggest shareholder is China National Materials Co
, the cement equipment and engineering services
behemoth, which also holds a 35.5 percent stake in Xinjiang
Tianshan.

The web of cross-ownership among debtors mirrors a similar
increase in inter-company loans that has raised the prospect of
a wave of defaults in the indebted corporate sector. Chinese
companies granted a net 2.55 trillion yuan ($411 billion) in
so-called entrusted loans in 2013, nearly double the 1.28
trillion yuan total in 2012.

Average collection periods for receivables extended to more
than 196 days for electrical equipment makers, 188 days for
companies in the building products' sector and more than 171
days for machinery manufacturers, Reuters data shows.

"While there's rising liquidity pressure, there's still the
expectation that these companies eventually will get paid."

LAWSUITS

To collect unpaid bills, some Chinese firms are taking the
increasingly common - though often fruitless - step of launching
lawsuits against deadbeat customers.

Xiamen Changelight Co, a LED chip maker for the
solar industry, filed three lawsuits over the last three years
for unpaid bills.

They included a 10.2 million yuan claim against Shenzhen
Junduoli Industrial Co, a privately-owned LED maker whose owner
allegedly ran off without repaying debts of 90 million yuan,
including a 30 million yuan loan to China Construction Bank.

Xiamen Changelight said in its annual report it would file
another 12 lawsuits over receivables and damages.

CSCEC Group was involved in more than 1 billion yuan in
unsettled lawsuits, including many involving project payments,
the company said in its annual report.

At Longyuan Construction, Zhang Li and her colleagues had 13
unsettled lawsuits at the end of last year. One involves a claim
of more than 213.7 million yuan against Shanghai Electric Group
Co., the power generation and equipment
conglomerate.

Winning a claim in court doesn't necessarily mean a company
will collect, especially if the losing firm has gone broke or
has had its assets stripped. "It takes one or two years at best,
and may take as long as five years," Zhang said.
($1 = 6.2375 Chinese Yuan)
(Additional reporting by Patturaja Murugaboopathy and the
Beijing Newsroom; Editing by Alex Richardson)

Dec 9 A former Cantor Fitzgerald trader has been
indicted on charges that he defrauded investors by lying about
the price of mortgage bond transactions he handled for them
after the financial crisis, U.S. prosecutors said on Friday.

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